The AI Book

CHAPTER 34Machine Learning in Digital Wealth Management

By Patrick Rotzetter¹

¹Business Technology Director, EPAM Systems

Artificial intelligence (AI) and its subset machine learning (ML) are becoming part of daily business in all business domains. In this chapter I am going to use ML instead of AI. This seems to be a more appropriate terminology as we have not yet reached real AI. Every day, we can see articles claiming that AI can now detect sentiments, create fake news and help build smart applications. Amidst all this media hype, there is little literature on how ML can be specifically applied to the wealth management process and what techniques can be used for that.

ML in Wealth Management

Before looking at the application of ML in wealth management, let us define the context of this article, and what it will cover. Wealth management covers a large area of financial services processes and products. There is no clear definition of what it really encompasses, but in our view wealth management is the end-to-end process of managing the personal wealth of an individual or a set of individuals who want an advisor to suggest actions to take and in which products to invest – in view of the risk appetite of the client and their investment goals. The process starts with the acquisition of clients through advising on investments to servicing clients by providing related banking and security services. The process ends with the transfer or closure of the client account, which we ...